Howard Dean says that employers have no right to make health decisions, but the gov’t does.
Maybe it’s a measure of progressives’ refusal to look back, to always move “forward.” Otherwise, they should be celebrating right now. In fact, President Obama and fellow modern progressives/liberals should have been ecstatic all this year, rejoicing over the centenary of something so fundamental to their ideology, to their core goals of government, to their sense of economic and social justice—to what Obama once called “redistributive change.”
And what is this celebratory thing to the progressive mind?
It is the progressive income tax. This year, it turned 100. Its permanent establishment was set forth in two historic moments: 1) an amendment to the Constitution (the 16th Amendment), ratified February 3, 1913; and 2) its signing into law by the progressive’s progressive, President Woodrow Wilson, on October 3, 1913. It was a major political victory for Wilson and fellow progressives then and still is today. By my math, that ought to mean a long, sustained party by today’s progressives, a period of extended thanksgiving.
President Obama once charged that “tax cuts for the wealthy” are the Republicans’ “Holy Grail.” Tax cuts form “their central economic doctrine.” Well, the federal income tax is the Democrats’ Holy Grail. For progressives/liberals, it forms their central economic doctrine.
As merely one illustration among many I could give, former DNC head Howard Dean and MSNBC host Lawrence O’Donnell were recently inveighing against Republican tax cuts. Dean extolled “what an increase in the top tax rate actually does.” He insisted: “that’s what governments do—is redistribute. The argument is not whether they should redistribute or not, the question is how much we should redistribute … The purpose of government is to make sure that capitalism works for everybody … It’s government’s job to redistribute.”
What Dean said is, in a few lines, a cornerstone of the modern progressive manifesto. For Dean and President Obama and allies, a federal income tax based on graduated or progressive rates embodies and enables government’s primary “job” and “purpose.” They embrace a progressive tax for the chief intention of wealth redistribution, which, in turn, allows for income leveling, income “equality,” and for government to do the myriad things that progressives ever-increasingly want government to do.
And so, in 1913, progressives struck gold. The notion of taxing income wasn’t entirely new. Such taxes existed before, albeit temporarily, at very small levels, and for national emergencies like war. The idea of a permanent tax for permanent income redistribution broke new ground. The only debate was the exact percentage of the tax. In no time, progressives learned that they could never get enough.
In 1913, when the progressive income tax began, the top rate was a mere 7 percent, applied only to the fabulously wealthy (incomes above $500,000). By the time Woodrow Wilson left office in 1921, the great progressive had hiked the upper rate to 73 percent. World War I (for America, 1917-18) had given Wilson a short-term justification, but so did Wilson’s passion for a robust “administrative state.”
Disagreeing with Wilson were the Republication administrations of Warren Harding and Calvin Coolidge, his immediate successors. Along with their Treasury secretary, Andrew Mellon, they reduced the upper rate, eventually bringing it down to 25 percent by 1925. In response, the total revenue to the federal Treasury increased significantly, from $700 million to $1 billion; and the budget was repeatedly in surplus.
Unfortunately, the rate began increasing under Herbert Hoover, who jacked the top rate to 63 percent. It soon skyrocketed to 94 percent under another legendary progressive, FDR, who, amazingly, once considered a top rate of 99.5 percent on income above $100,000 (yes, you read that right).
Appalled by this was an actor named Ronald Reagan, himself a progressive Democrat—though not much longer. Reagan often noted that Karl Marx, in his “Communist Manifesto” (1848), demanded a permanent “heavy progressive or graduated income tax.” Indeed, it’s point two in Marx’s 10-point program, second only to his call for “abolition of property.”
The upper tax rate wasn’t reduced substantially until 1965, when it came down to 70 percent. Alas, President Ronald Reagan took it down to 28 percent. And despite claims to the contrary, federal revenues under Reagan increased (as they did in the 1920s), rising from $600 billion to nearly $1 trillion. (The Reagan deficits were caused by excessive spending and decreased revenue from the 1981-3 recession.)
The upper rate increased again (to 31 percent) under George H. W. Bush and under Bill Clinton (39.6 percent). George W. Bush cut it to 35 percent. Barack Obama has returned it to the Clinton level of 39.6 percent.
Here in 2013, 100 years henceforth, the wealthiest Americans—the top 10 percent of which already pay over 70 percent of federal tax revenue—will be paying more in taxes this year than any time in the last 30 years. For progressives, this is justice. But it is also bittersweet: As progressives know deep inside, it still isn’t enough. For them, it’s never enough.
To that end, my enduring question for progressives is one they typically avoid answering, especially those holding elected office: In your perfect world, where, exactly, would you position the top rate? I routinely hear numbers in the 50-70 percent range.
Democrats like President Obama complain about Republican intransigence in raising tax rates but, truth be told—and as any liberal really knows—if it wasn’t for Republican resistance, progressives would rarely, if ever, cut taxes. America would remain on a one-way upward trajectory in tax rates, just like under Woodrow Wilson and FDR, and just as it has been in its unrestrained spending for nearly 50 years. Like their refusal to cut spending (other than on defense), progressives are dragged kicking and screaming into tax cuts. They need high income taxes for the government planning and redistributing they want to do, for Obama’s sense of redistributive justice.
This year, the progressive income tax turns 100. For progressives, getting it implemented was a huge triumph. Their success in making it a permanent part of the American landscape is a more stunning achievement still.
Editor’s note: This article first appeared at Investor’s Business Daily.
Dr. Paul Kengor is professor of political science at Grove City College, executive director of The Center for Vision & Values, and New York Times best-selling author of the book, “The Communist: Frank Marshall Davis, The Untold Story of Barack Obama’s Mentor.” His other books include “The Crusader: Ronald Reagan and the Fall of Communism” and “Dupes: How America’s Adversaries Have Manipulated Progressives for a Century.”
Photo credit: terrellaftermath
The problem with 2,400 pages of legislation is not in what politicians promise the legislation will do, but what it does in reality, including the creation of nearly 40,000 pages of regulations affecting our health care. And the reality with the Affordable Care Act (ACA), as we’re witnessing nearly daily in financial media, is devastating. And not just for the economy and the middle class (as we discussed last week) but for our healthcare system itself. When you dramatically alter the third-party payment system and place federal mandates on available health-care insurance plans, the whole health care delivery system is adversely affected. To believe otherwise is naiveté.
The ACA (Obamacare) was sold to us on the basis that there were 40 million Americans without health insurance and that the Act would rectify the apparent inequity. That actually is the first broken promise of Obamacare. The Congressional Budget Office (CBO) admits that after 10 years of implementation, Obamacare “will still leave 31 million uninsured.” And we’ll have spent $1.93 trillion failing to achieve the primary objective of the Act! And that new dollar figure from the CBO is still likely an underestimate since they’ve revised the figure upward three times already.
One of the byproducts of a third-party (insurance company) payment system for health care is that the consumer or patient is considerably removed from the cost of services. The ACA increases this gap by requiring “free preventive services,” restricting deductibles, and proscribing lifetime benefit limits. Currently, over 36% of health insurance plans have higher out of pocket limits than allowed by the ACA. The Act also places new restrictions on Health Savings Accounts that have allowed 24 million Americans to be more attentive to pricing since they paid for services themselves. These provisions will remove the consumer from the cost of service even more, which has an escalating effect on healthcare costs.
“We will keep this promise to the American people. If you like your health care plan, you can keep your health care plan. Period. No one will take it away,” we heard daily from the president while pitching his plan. This is the second major broken promise of the ACA. The new requirements imposed on employer sponsored insurance (ESI) plans will make the costs increase significantly for employers. Many employers will discontinue their plans altogether, forcing employees to the state exchanges to buy their insurance for themselves.
In June, McKinsey & Company released results of a study where they found, “Overall, 30 percent of employers will definitely or probably stop offering ESI in the years after 2014. Among employers with a high awareness of reform, this proportion increases to more than 50 percent, and upward of 60 percent will pursue some alternative to traditional ESI.” This contrasts sharply with CBO estimates of 7% of employees losing their current ESI, and the president’s promise that none would.
Those who will be able to retain their current plan will see significant changes. According to the National Business Group on Health, 30% of all companies with ESIs are considering dropping coverage for retirees and over 50% are considering dropping spousal coverage. And it’s not just the private sector, as local governments are looking at the same solutions. The mayor of Chicago, Obama’s former Chief of Staff, Rahm Emanuel, is planning to drop 30,000 city retirees off of the city’s ESI and push them into the exchanges to buy their own. He projects a savings of $108 million per year.
Promoting the passage of his signature legislation, President Obama vowed, “that my plan will reduce the cost of health insurance by $2,500 for average families.” But according to Investor’s Business Daily, since Obamacare passed, the cost of an average family policy has already increased by $3,000, mostly in anticipation of the new regulations and mandates imposed on providers and insurers.
All the new regulatory requirements are going to cause health insurance premiums to soar even more, especially for younger and healthier individuals. After all, the government subsidies will pay for the added expense of covering preexisting conditions, which was forced by the ACA. Holtz-Eakins’ American Action Forum analyzed insurance premiums in five major cities, and calculated that Obamacare mandates will cause premiums to rise additionally an average of 169%.
The National Center for Policy Analysis warns that seniors may be the most hard hit with service quality, and quantity issues. NCPA President John Goodman correctly observed that almost half of Obamacare is paid for over the next decade by draining $716 billion out of Medicare.
Confirming the fears of many who actually read the bill, Howard Dean, a doctor and former DNC Chairman, wrote recently in the Wall Street Journal, “One major problem [with Obamacare] is the so-called Independent Payment Advisory Board. The IPAB is essentially a health-care rationing body. By setting doctor reimbursement rates for Medicare and determining which procedures and drugs will be covered and at what price, the IPAB will be able to stop certain treatments its members do not favor by simply setting rates to levels where no doctor or hospital will perform them.” This obviously was what the president was referring to when he said “Give them a pill instead of the surgery.”
This barely scratches the surface of the myriad of problems created by the ACA. To my count, there are dozens of such problems. Ted Cruz was right to dominate the news cycle for 21 hours in an attempt to prevent this “train wreck” to the economy and our health care. The ACA is clearly the wrong prescription for our healthcare ailments, and won’t even accomplish what it was promised to do.
AP award winning columnist Richard Larsen is President of Larsen Financial, a brokerage and financial planning firm in Pocatello, Idaho and is a graduate of Idaho State University with degrees in Political Science and History and coursework completed toward a Master’s in Public Administration. He can be reached at email@example.com.
Photo Credit: Standard Compliant
In response to Senate testimony provided by Health and Human Services Secretary Kathleen Sebelius, Max Baucus, the Democrat Senator from North Dakota, used the phrase “train wreck” to describe the implementation of Obamacare (to which Sebelius could offer no reply.)
Obamacare supporters were once composed of liberals, unions, Hollywood celebrities, and the Democrat party in total since the law was passed strictly along party lines. However, the supporters are defecting from the Obama camp over Obamacare in droves as October 1st approaches.
- Warren Buffet – “…I would much rather see another plan [and] …that’s what the American public wants to see…the American public is not behind this bill.”
Warren Buffet is a Democrat, one of the richest men in America, and an Obama supporter. He now says that Obamacare will not work because it is misguided on principle.
Labor unions were another major supporter of Obama and actively worked for the passage of Obamacare.
- Richard Trumka (AFL-CIO President)- “Obamacare is…the right direction but…we made some mistakes.”
- Terence O’Sullivan (Laborers’ International Union President) – “If the Affordable Care Act is not fixed…then I believe it needs to be repealed.”
There have been 14 laws “tweaking” Obamacare. Obama bypassed Congress five times delaying the implementation of Obamacare. Yet, the unions still want it fixed. The unions, staunch Democrat supporters, want Obamacare repealed.
- Howard Dean (Former Governor of Vermont and Democratic Presidential Candidate) – “There does have to be control of costs in our health-care system. However, rate setting — the essential mechanism of the IPAB (Independent Payment Advisory Board)— has a 40-year track record of failure.”
Let that one sink in for a moment. One of the main components of Obamacare has a 40 year track record of failure! Twenty-two Democrats are now supporting efforts to repeal the IPAB. Democrats now want to eliminate the cost control mechanism for Obamacare that is supposed to pay for itself.
Thirty-three Senate Democrats helped passed a bill in the Democrat-controlled Senate to repeal the 2.3% tax on medical devices. Repealing the tax would eliminate a source of funding that was supposed to pay for the deficit-neutral bill.
Thirty-three Senate Democrats now want to defund a portion of Obamacare.
The question is: why do Democrats want to stop Obamacare now?
Start with failed promises. Based on the law, people will be forced into the healthcare exchanges if they are considered high risk, which also means they cannot keep their doctor either, starting in 2014. People will lose their healthcare coverage if their employer chooses to drop coverage, cut hours, or if they simply force employees onto the healthcare exchanges. Despite Obamacare, the number of people who will be uninsured will be above 30 million for the next ten years.
Then there is the cost of implementing Obamacare.
If you use the Democrats’ initial estimate of $940 billion (because it has been the lowest estimate), there is still not enough money to pay for it. That equals an average cost of $94 billion dollars a year for 10 years.
The individual mandate tax is the major source of funding, since it impacts everyone in the U.S. labor force (who would have to buy insurance or pay a tax for not having insurance for one month or more in any year.)
The thirty three Democrat Senators have now realized the numbers do not add up.
In terms of what is required to be paid because of the mandate, it is whichever amount is higher – the flat dollar amount ($95 for 2014) or the percentage of income (1% for 2014, which would probably be the higher amount.)
The Urban Institute (with independent analysis by MIT economist Jonathan Gruber) conducted a study saying that approximately 7.3 million people (2 percent) would have to pay this tax. Politico.com and ThinkProgress.org agreed with their study.
So, in 2014, when the flat amount is $95, the individual mandate would generate approximately $760 million dollars. That leaves approximately $93.2 billion dollars to be raised for the year 2014. Where is that money coming from? Not the employer mandate that starts in 2015, not the excise tax that does not start until 2018 or 2019 (depending on your source), and not the medical device tax.
Even using the $695 amount, the mandate would only generate approximately $5.6 billion dollars. That would leave $88.4 billion dollars to be raised for the year 2014 to pay for Obamacare.
The average income under Obama has dropped to about $50,000. So, a 1% tax would be $500. Multiply that by 8 million, and the individual mandate generates approximately $4 billion. That would leave approximately $90 billion dollars left to be raised for the year 2014 to pay for Obamacare.
These Democrats have realized that Obamacare will not be paid for at any point. These Democrats have started working with the Republicans to defund and repeal portions of Obamacare. There are thirty three Democrat votes in the Senate that are now swing votes.
All the Republicans have to do is make the case for them to get rid of this “train wreck” of a law.
Photo credit: terrellaftermath
Add former presidential candidate Howard Dean to the list of Democrats supporting the repeal of a controversial Medicare cost-cutting board in President Obama’s healthcare law.
Dean, in a Wall Street Journal op-ed Monday, called the Independent Payment Advisory Board (IPAB) “essentially a health-care rationing body” and said he believes it will fail.
“There does have to be control of costs in our health-care system. However, rate setting — the essential mechanism of the IPAB — has a 40-year track record of failure,” Dean wrote.
Healthcare providers staunchly oppose the IPAB, which makes nearly automatic cuts in Medicare’s payments to providers if the program’s spending grows faster than a certain rate.
Dean represents healthcare industries in his position as a senior adviser at the law and lobbying firm McKenna Long & Aldridge.
Read More at The Hill . By Sam Baker.